Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - SONIC AUTOMOTIVE INC | q120188kexhibit992r762d.htm |
| 8-K - 8-K - SONIC AUTOMOTIVE INC | q120188-k.htm |
Exhibit 99.1
Sonic Automotive, Inc. Reports First Quarter Results -
Record Revenue and Gross Profit
CHARLOTTE, N.C. – April 26, 2018 – Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported financial results for the first quarter of 2018.
• | Record first quarter revenue and gross profit of $2.4 billion and $352.5 million, respectively |
• | All-time record quarterly pre-owned retail unit sales of 33,739 units |
• | All-time record quarterly F&I gross profit per retail unit of $1,490 |
• | Record first quarter F&I gross of $93.7 million |
• | Record first quarter fixed operations gross profit of $169.6 million |
• | Pre-owned segment retailed over 5,500 units during the quarter |
First Quarter 2018 Results
GAAP Basis
Net loss from continuing operations for the first quarter of 2018 was $2.0 million, or $0.05 per diluted share. Comparatively, net loss from continuing operations for the first quarter of 2017 was $0.0 million, or $0.0 per diluted share.
Adjusted Basis
Adjusted net income from continuing operations and related earnings per diluted share are non-GAAP financial measures. The schedules included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Adjusted net income from continuing operations for the first quarter of 2018 was $11.0 million, or $0.26 per diluted share. The adjustments in the 2018 quarterly period relate to a gain on the disposal of franchises offset by fixed asset impairments, compensation related charges, lease exit accruals and certain legal matters. Adjusted net income from continuing operations for the first quarter of 2017 was $10.3 million, or $0.23 per diluted share. The adjustments in the 2017 quarterly period relate to the redemption of Sonic’s 7.0% Senior Subordinated Notes due 2022 (the “7.0% Notes”), weather-related physical damage costs and fixed asset impairments, offset by net settlement gains related to legal matters.
Commentary
Heath Byrd, the Company’s Chief Financial Officer, noted, “The first quarter met our internal earnings expectations and we remain confident with our full year earnings guidance. We shifted our strategy during the quarter related to the number of used vehicle inventory we are carrying. The decline in used gross per unit and the increase in wholesale loss resulted from us aggressively disposing of units to reduce our overall days’ supply of used vehicles. Additionally, we believe we found a good compromise between volume and gross for new vehicles and we were able to grow both fixed operations and F&I gross profit compared to the first quarter of 2017.”
“We remain committed to growing our franchise store operations and our EchoPark brand. In addition to our dividend of $0.06 per share distributed during the first quarter, we continue to honor our commitment to return capital to shareholders as we repurchased approximately 1.2 million shares of our common stock for approximately $23.4 million.”
Dividend
Sonic’s Board of Directors approved a quarterly dividend of $0.06 per share payable in cash for our stockholders of record on June 15, 2018. The dividend will be payable on July 13, 2018.
First Quarter Earnings Conference Call
Senior management will host a conference call today at 11:00 A.M. (Eastern) to discuss the quarter’s results. To access the live broadcast of the call over the Internet go to: www.sonicautomotive.com, then click on “Our Company,” then “Investor Relations,” then “Earnings Conference Calls.”
Presentation materials for the conference call can be accessed on the Company’s website at www.sonicautomotive.com by clicking on the “Investor Relations” tab under “Our Company” and choosing “Webcasts & Presentations.”
The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:
Domestic: (877) 450-3867
International: (706) 643-0958
Conference ID: 9399998
A conference call replay will be available one hour following the call for seven days and can be accessed by calling:
Domestic: (855) 859-2056
International: (404) 537-3406
Conference ID: 9399998
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com. More information about EchoPark Automotive can be found at www.echopark.com.
Forward-Looking Statements
Included herein are forward-looking statements, including statements with respect to our 2018 earnings expectations, our projected annual effective income tax rate, 2018 new vehicle industry volume, projected results for our EchoPark brand, the anticipated expansion of both our franchised and pre-owned businesses in 2018 and our long-term strategy. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management’s views, including without limitation, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The Company does not undertake any obligation to update forward-looking information, except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Non-GAAP Financial Measures
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income from continuing operations and related earnings per diluted share, which exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company provides reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosure, provide a meaningful presentation of the Company’s results from its core business operations excluding the impact of items not related to the Company’s ongoing core business operations, and improve the period-to-period comparability of the Company’s results from its core business operations.
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Results of Operations
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(In thousands, except per share and unit data) | |||||||
Revenues: | |||||||
New vehicles | $ | 1,180,846 | $ | 1,171,932 | |||
Used vehicles | 709,046 | 634,474 | |||||
Wholesale vehicles | 65,398 | 46,310 | |||||
Total vehicles | 1,955,290 | 1,852,716 | |||||
Parts, service and collision repair | 351,758 | 352,043 | |||||
Finance, insurance and other, net | 93,725 | 83,063 | |||||
Total revenues | 2,400,773 | 2,287,822 | |||||
Gross profit | 352,499 | 350,346 | |||||
Selling, general and administrative expenses | (304,925 | ) | (292,234 | ) | |||
Impairment charges | (3,643 | ) | (510 | ) | |||
Depreciation and amortization | (23,743 | ) | (21,153 | ) | |||
Operating income (loss) | 20,188 | 36,449 | |||||
Other income (expense): | |||||||
Interest expense, floor plan | (10,677 | ) | (8,387 | ) | |||
Interest expense, other, net | (13,456 | ) | (13,409 | ) | |||
Other income (expense), net | 89 | (14,501 | ) | ||||
Total other income (expense) | (24,044 | ) | (36,297 | ) | |||
Income (loss) from continuing operations before taxes | (3,856 | ) | 152 | ||||
Provision for income taxes for continuing operations - benefit (expense) | 1,842 | (172 | ) | ||||
Income (loss) from continuing operations | (2,014 | ) | (20 | ) | |||
Income (loss) from discontinued operations | (180 | ) | (521 | ) | |||
Net income (loss) | $ | (2,194 | ) | $ | (541 | ) | |
Diluted earnings (loss) per common share: | |||||||
Earnings (loss) per share from continuing operations | $ | (0.05 | ) | $ | — | ||
Earnings (loss) per share from discontinued operations | — | (0.01 | ) | ||||
Earnings (loss) per common share | $ | (0.05 | ) | $ | (0.01 | ) | |
Weighted average common shares outstanding | 42,789 | 44,791 | |||||
Gross Margin Data (Continuing Operations): | |||||||
New vehicles | 4.8 | % | 5.0 | % | |||
Used vehicles | 5.2 | % | 6.4 | % | |||
Wholesale vehicles | (6.8 | )% | (2.5 | )% | |||
Parts, service and collision repair | 48.2 | % | 48.1 | % | |||
Finance, insurance and other | 100.0 | % | 100.0 | % | |||
Overall gross margin | 14.7 | % | 15.3 | % | |||
SG&A Expenses (Continuing Operations): | |||||||
Compensation | 185,037 | 176,547 | |||||
Advertising | 16,016 | 15,257 | |||||
Rent | 21,868 | 18,487 | |||||
Other | 82,004 | 81,943 | |||||
Total SG&A expenses | 304,925 | 292,234 | |||||
SG&A expenses as % of gross profit | 86.5 | % | 83.4 | % | |||
Operating Margin % | 0.8 | % | 1.6 | % | |||
Unit Data (Continuing Operations): | |||||||
New units | 29,500 | 30,495 | |||||
Used units | 33,739 | 30,372 | |||||
Wholesale units | 9,680 | 8,307 | |||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Per Share Data
Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||
Income (Loss) | Income (Loss) | |||||||||||||||||||||||||
From Continuing Operations | From Discontinued Operations | Net Income (Loss) | ||||||||||||||||||||||||
Weighted Average Shares | Amount | Per Share Amount | Amount | Per Share Amount | Amount | Per Share Amount | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||
Reported: | ||||||||||||||||||||||||||
Earnings (loss) and shares | 42,789 | $ | (2,014 | ) | $ | (180 | ) | $ | (2,194 | ) | ||||||||||||||||
Effect of participating securities: | ||||||||||||||||||||||||||
Non-vested restricted stock | — | — | — | |||||||||||||||||||||||
Basic earnings (loss) and shares | 42,789 | $ | (2,014 | ) | $ | (0.05 | ) | $ | (180 | ) | $ | — | $ | (2,194 | ) | $ | (0.05 | ) | ||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock compensation plans | — | |||||||||||||||||||||||||
Diluted earnings (loss) and shares | 42,789 | $ | (2,014 | ) | $ | (0.05 | ) | $ | (180 | ) | $ | — | $ | (2,194 | ) | $ | (0.05 | ) | ||||||||
Adjustments: | ||||||||||||||||||||||||||
Impairment charges | $ | 3,643 | $ | — | $ | 3,643 | ||||||||||||||||||||
Legal and other | 1,500 | — | 1,500 | |||||||||||||||||||||||
Compensation-related charges | 9,189 | — | 9,189 | |||||||||||||||||||||||
Lease exit adjustments | 4,814 | — | 4,814 | |||||||||||||||||||||||
Gain on disposal | (1,190 | ) | — | (1,190 | ) | |||||||||||||||||||||
Total adjustments before taxes | 17,956 | — | 17,956 | |||||||||||||||||||||||
Income tax effect of adjustments | (4,894 | ) | $ | (4,894 | ) | |||||||||||||||||||||
Effect of adjustments, net of income taxes | $ | 13,062 | $ | 0.31 | $ | — | $ | (0.01 | ) | $ | 13,062 | $ | 0.30 | |||||||||||||
Adjusted: | ||||||||||||||||||||||||||
Earnings (loss) and diluted earnings (loss) per share (1) | $ | 11,048 | $ | 0.26 | $ | (180 | ) | $ | (0.01 | ) | $ | 10,868 | $ | 0.25 | ||||||||||||
(1) | Net loss attributable to Pre-Owned Stores operations was $0.10 per fully diluted share in the three months ended March 31, 2018. |
Three Months Ended March 31, 2017 | ||||||||||||||||||||||||||
Income (Loss) | Income (Loss) | |||||||||||||||||||||||||
From Continuing Operations | From Discontinued Operations | Net Income (Loss) | ||||||||||||||||||||||||
Weighted Average Shares | Amount | Per Share Amount | Amount | Per Share Amount | Amount | Per Share Amount | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||
Reported: | ||||||||||||||||||||||||||
Earnings (loss) and shares | 44,791 | $ | (20 | ) | $ | (521 | ) | $ | (541 | ) | ||||||||||||||||
Effect of participating securities: | ||||||||||||||||||||||||||
Non-vested restricted stock | — | — | — | |||||||||||||||||||||||
Basic earnings (loss) and shares | 44,791 | $ | (20 | ) | $ | — | $ | (521 | ) | $ | (0.01 | ) | $ | (541 | ) | $ | (0.01 | ) | ||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock compensation plans | — | |||||||||||||||||||||||||
Diluted earnings (loss) and shares (2) | 44,791 | $ | (20 | ) | $ | — | $ | (521 | ) | $ | (0.01 | ) | $ | (541 | ) | $ | (0.01 | ) | ||||||||
Adjustments: | ||||||||||||||||||||||||||
Impairment charges | $ | 510 | $ | — | $ | 510 | ||||||||||||||||||||
Legal and other | (1,149 | ) | — | (1,149 | ) | |||||||||||||||||||||
Storm damage | 2,382 | — | 2,382 | |||||||||||||||||||||||
Loss on debt extinguishment | 15,268 | — | 15,268 | |||||||||||||||||||||||
Total adjustments before taxes | 17,011 | — | 17,011 | |||||||||||||||||||||||
Income tax effect of adjustments | (6,677 | ) | — | $ | (6,677 | ) | ||||||||||||||||||||
Effect of adjustments, net of income taxes | $ | 10,334 | $ | 0.23 | $ | — | $ | — | $ | 10,334 | $ | 0.23 | ||||||||||||||
Adjusted: | ||||||||||||||||||||||||||
Earnings (loss) and diluted earnings (loss) per share (2) | $ | 10,314 | $ | 0.23 | $ | (521 | ) | $ | (0.01 | ) | $ | 9,793 | $ | 0.22 | ||||||||||||
(2) | Net loss attributable to Pre-Owned Stores operations was $0.07 per fully diluted share in the three months ended March 31, 2017. |
Sonic Automotive, Inc.
Results of Operations (Unaudited)
New Vehicles
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported new vehicle: | ||||||||||||||
Revenue | $ | 1,180,846 | $ | 1,171,932 | $ | 8,914 | 0.8 | % | ||||||
Gross profit | $ | 56,800 | $ | 58,278 | $ | (1,478 | ) | (2.5 | )% | |||||
Unit sales | 29,500 | 30,495 | (995 | ) | (3.3 | )% | ||||||||
Revenue per unit | $ | 40,029 | $ | 38,430 | $ | 1,599 | 4.2 | % | ||||||
Gross profit per unit | $ | 1,925 | $ | 1,911 | $ | 14 | 0.7 | % | ||||||
Gross profit as a % of revenue | 4.8 | % | 5.0 | % | (20 | ) | bps | |||||||
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store new vehicle: | ||||||||||||||
Revenue | $ | 1,176,510 | $ | 1,151,850 | $ | 24,660 | 2.1 | % | ||||||
Gross profit | $ | 56,757 | $ | 57,717 | $ | (960 | ) | (1.7 | )% | |||||
Unit sales | 29,416 | 29,865 | (449 | ) | (1.5 | )% | ||||||||
Revenue per unit | $ | 39,996 | $ | 38,569 | $ | 1,427 | 3.7 | % | ||||||
Gross profit per unit | $ | 1,929 | $ | 1,933 | $ | (4 | ) | (0.2 | )% | |||||
Gross profit as a % of revenue | 4.8 | % | 5.0 | % | (20 | ) | bps | |||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Used Vehicles
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported used vehicle: | ||||||||||||||
Revenue | $ | 709,046 | $ | 634,474 | $ | 74,572 | 11.8 | % | ||||||
Gross profit | $ | 36,771 | $ | 40,833 | $ | (4,062 | ) | (9.9 | )% | |||||
Unit sales | 33,739 | 30,372 | 3,367 | 11.1 | % | |||||||||
Revenue per unit | $ | 21,016 | $ | 20,890 | $ | 126 | 0.6 | % | ||||||
Gross profit per unit | $ | 1,090 | $ | 1,344 | $ | (254 | ) | (18.9 | )% | |||||
Gross profit as a % of revenue | 5.2 | % | 6.4 | % | (120 | ) | bps | |||||||
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store used vehicle: | ||||||||||||||
Revenue | $ | 629,510 | $ | 613,348 | $ | 16,162 | 2.6 | % | ||||||
Gross profit | $ | 34,306 | $ | 37,970 | $ | (3,664 | ) | (9.6 | )% | |||||
Unit sales | 29,690 | 29,162 | 528 | 1.8 | % | |||||||||
Revenue per unit | $ | 21,203 | $ | 21,032 | $ | 171 | 0.8 | % | ||||||
Gross profit per unit | $ | 1,155 | $ | 1,302 | $ | (147 | ) | (11.3 | )% | |||||
Gross profit as a % of revenue | 5.4 | % | 6.2 | % | (80 | ) | bps | |||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Wholesale Vehicles
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported used vehicle: | ||||||||||||||
Revenue | $ | 65,398 | $ | 46,310 | $ | 19,088 | 41.2 | % | ||||||
Gross profit | $ | (4,425 | ) | $ | (1,172 | ) | $ | (3,253 | ) | (277.6 | )% | |||
Unit sales | 9,680 | 8,307 | 1,373 | 16.5 | % | |||||||||
Revenue per unit | $ | 6,756 | $ | 5,575 | $ | 1,181 | 21.2 | % | ||||||
Gross profit per unit | $ | (457 | ) | $ | (141 | ) | $ | (316 | ) | (224.1 | )% | |||
Gross profit as a % of revenue | (6.8 | )% | (2.5 | )% | (430 | ) | bps | |||||||
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store used vehicle: | ||||||||||||||
Revenue | $ | 62,719 | $ | 45,154 | $ | 17,565 | 38.9 | % | ||||||
Gross profit | $ | (4,669 | ) | $ | (1,080 | ) | $ | (3,589 | ) | (332.3 | )% | |||
Unit sales | 9,215 | 7,991 | 1,224 | 15.3 | % | |||||||||
Revenue per unit | $ | 6,806 | $ | 5,651 | $ | 1,155 | 20.4 | % | ||||||
Gross profit per unit | $ | (507 | ) | $ | (135 | ) | $ | (372 | ) | (275.6 | )% | |||
Gross profit as a % of revenue | (7.4 | )% | (2.4 | )% | (500 | ) | bps | |||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Parts, Service and Collision Repair (“Fixed Operations”)
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported: | ||||||||||||||
Revenue | ||||||||||||||
Customer pay | $ | 142,354 | $ | 138,582 | $ | 3,772 | 2.7 | % | ||||||
Warranty | 67,601 | 69,471 | (1,870 | ) | (2.7 | )% | ||||||||
Wholesale parts | 42,501 | 43,281 | (780 | ) | (1.8 | )% | ||||||||
Internal, sublet and other | 99,302 | 100,709 | (1,407 | ) | (1.4 | )% | ||||||||
Total | $ | 351,758 | $ | 352,043 | $ | (285 | ) | (0.1 | )% | |||||
Gross profit | ||||||||||||||
Customer pay | $ | 76,350 | $ | 73,764 | $ | 2,586 | 3.5 | % | ||||||
Warranty | 37,901 | 38,347 | (446 | ) | (1.2 | )% | ||||||||
Wholesale parts | 7,265 | 7,550 | (285 | ) | (3.8 | )% | ||||||||
Internal, sublet and other | 48,112 | 49,683 | (1,571 | ) | (3.2 | )% | ||||||||
Total | $ | 169,628 | $ | 169,344 | $ | 284 | 0.2 | % | ||||||
Gross profit as a % of revenue | ||||||||||||||
Customer pay | 53.6 | % | 53.2 | % | 40 | bps | ||||||||
Warranty | 56.1 | % | 55.2 | % | 90 | bps | ||||||||
Wholesale parts | 17.1 | % | 17.4 | % | (30 | ) bps | ||||||||
Internal, sublet and other | 48.5 | % | 49.3 | % | (80 | ) bps | ||||||||
Total | 48.2 | % | 48.1 | % | 10 | bps | ||||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Parts, Service and Collision Repair (“Fixed Operations”)
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same Store: | ||||||||||||||
Revenue | ||||||||||||||
Customer pay | $ | 140,928 | $ | 136,081 | $ | 4,847 | 3.6 | % | ||||||
Warranty | 67,982 | 67,856 | 126 | 0.2 | % | |||||||||
Wholesale parts | 42,437 | 42,703 | (266 | ) | (0.6 | )% | ||||||||
Internal, sublet and other | 96,597 | 98,435 | (1,838 | ) | (1.9 | )% | ||||||||
Total | $ | 347,944 | $ | 345,075 | $ | 2,869 | 0.8 | % | ||||||
Gross profit | ||||||||||||||
Customer pay | $ | 75,680 | $ | 72,387 | $ | 3,293 | 4.5 | % | ||||||
Warranty | 38,072 | 37,424 | 648 | 1.7 | % | |||||||||
Wholesale parts | 7,249 | 7,435 | (186 | ) | (2.5 | )% | ||||||||
Internal, sublet and other | 47,058 | 48,022 | (964 | ) | (2.0 | )% | ||||||||
Total | $ | 168,059 | $ | 165,268 | $ | 2,791 | 1.7 | % | ||||||
Gross profit as a % of revenue | ||||||||||||||
Customer pay | 53.7 | % | 53.2 | % | 50 | bps | ||||||||
Warranty | 56.0 | % | 55.2 | % | 80 | bps | ||||||||
Wholesale parts | 17.1 | % | 17.4 | % | (30 | ) bps | ||||||||
Internal, sublet and other | 48.7 | % | 48.8 | % | (10 | ) bps | ||||||||
Total | 48.3 | % | 47.9 | % | 40 | bps | ||||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Finance, Insurance and Other, Net (“F&I”)
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except per unit data) | ||||||||||||||
Reported: | ||||||||||||||
Revenue | $ | 93,725 | $ | 83,063 | $ | 10,662 | 12.8 | % | ||||||
Gross profit per retail unit (excludes fleet) | $ | 1,490 | $ | 1,379 | $ | 111 | 8.0 | % | ||||||
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | ||||||||||||
(In thousands, except per unit data) | ||||||||||||||
Same Store: | ||||||||||||||
Revenue | $ | 84,074 | $ | 80,139 | $ | 3,935 | 4.9 | % | ||||||
Gross profit per retail unit (excludes fleet) | $ | 1,430 | $ | 1,372 | $ | 58 | 4.2 | % | ||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Selling, General and Administrative (“SG&A”) Expenses
Three Months Ended March 31, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands) | ||||||||||||||
Reported: | ||||||||||||||
Compensation | $ | 185,037 | $ | 176,547 | $ | (8,490 | ) | (4.8 | )% | |||||
Advertising | 16,016 | 15,257 | (759 | ) | (5.0 | )% | ||||||||
Rent | 21,868 | 18,487 | (3,381 | ) | (18.3 | )% | ||||||||
Other | 82,004 | 81,943 | (61 | ) | (0.1 | )% | ||||||||
Total SG&A expenses | $ | 304,925 | $ | 292,234 | $ | (12,691 | ) | (4.3 | )% | |||||
Adjustments: | ||||||||||||||
Legal and other | $ | (1,500 | ) | $ | 1,149 | |||||||||
Compensation-related charges | (9,189 | ) | — | |||||||||||
Lease exit adjustments | (4,814 | ) | — | |||||||||||
Storm damage | — | (2,382 | ) | |||||||||||
Gain on disposal | 1,190 | — | ||||||||||||
Total SG&A adjustments | $ | (14,313 | ) | $ | (1,233 | ) | ||||||||
Adjusted: | ||||||||||||||
Total adjusted SG&A expenses | $ | 290,612 | $ | 291,001 | $ | 389 | 0.1 | % | ||||||
Reported: | ||||||||||||||
SG&A expenses as a % of gross profit: | ||||||||||||||
Compensation | 52.5 | % | 50.4 | % | (210 | ) bps | ||||||||
Advertising | 4.5 | % | 4.4 | % | (10 | ) bps | ||||||||
Rent | 6.2 | % | 5.3 | % | (90 | ) bps | ||||||||
Other | 23.3 | % | 23.3 | % | — | |||||||||
Total SG&A expenses as a % of gross profit | 86.5 | % | 83.4 | % | (310 | ) bps | ||||||||
Adjustments: | ||||||||||||||
Legal and other | (0.4 | )% | 0.3 | % | ||||||||||
Compensation-related charges | (2.6 | )% | — | % | ||||||||||
Lease exit adjustments | (1.4 | )% | — | % | ||||||||||
Storm damage | — | % | (0.6 | )% | ||||||||||
Gain on disposal | 0.3 | % | — | % | ||||||||||
Total effect of adjustments | (4.1 | )% | (0.3 | )% | ||||||||||
Adjusted: | ||||||||||||||
Total adjusted SG&A expenses as a % of gross profit | 82.4 | % | 83.1 | % | 70 | bps | ||||||||
Contact: | Heath Byrd, Chief Financial Officer (704) 566-2400 C.G. Saffer, Vice President and Chief Accounting Officer (704) 566-2439 |